13 May Rising house prices putting Millennials at risk of ‘cubby house syndrome’ – Kylie Davis
New research reveals the emergence of an increasingly dependent generation, with young people battling housing affordability resigned to living with their parents for longer.
The Perceptions of Housing Affordability (www.corelogic.com.au/housingaffordability) from CoreLogic shows that almost two-thirds of those living at home (62%) say they can’t afford to move out, while 21% of those aged 18 or over and living in the family home expect to remain with their parents until they are at least 30 years old.
This phenomenon could see the rise of ‘Cubby House Syndrome’, whereby parents try and fashion some sort of independent living arrangements for their offspring on their existing premises.
Coined by CoreLogic CEO Lisa Claes, ‘Cubby House Syndrome’ could be the reluctant compromise for young people unable to follow the traditional rite of passage of buying their own home.
“Protracted affordability pressures means the outlook is bleak for many young people who want to fly the nest, so parents and their offspring need to be increasingly resourceful and innovative in the way they approach the challenge,” says Lisa Claes.
“On the plus side, parents may have ‘wasted space’ at their disposal, and with a little creativity, could make use of it to give young people some semblance of independence, even when they can’t afford to fly the nest completely.”
“There may be potential for garages and sheds to be revitalised and turned into a self-contained abode on the premises. Transform rumpus rooms, or consider renovating the basement. ‘Cubby Houses’ could well be the new granny flats.”
The research, conducted by Galaxy and analysed by CoreLogic shows that while 62% say having a well-paid job is the best help to get on the property ladder, 30% say they are holding out for an inheritance to help them buy their first home, or relying on some assistance from their family.
“If you’re not downsizing your property, freeing up equity and able to give your kids a helping hand that way, then look at the land you have at your disposal,” says Claes.
“Extending your home outwards is another option. For frustrated Millennials, it could be a happy medium between living at home with your parents and moving out to struggle street.”
Getting on the property ladder remains a priority for young Australians, despite growing fears that the dream of home ownership is drifting further out of reach.
The Perceptions of Housing Affordability report indicates almost two-thirds (62%) of Australians believe housing affordability is worse than it was a year ago, with a similar number (58%) believing the outlook for next year will remain the same or deteriorate further.
While the vast majority (89%) of non-homeowners believe it’s important to own a property, 87% are concerned they cannot afford to do so. Furthermore, more than three-quarters (76%) of existing homeowners are concerned about moving to their next property, rising to 88% among apartment owners.
Nationally, saving for a deposit is perceived to be the biggest impediment to buying a property, followed by stamp duty costs, and the threat posed by foreign buyers.
Stamp duty was of greatest concern in NSW, South Australia and the Northern Territory (48%), with fears about finding a deposit most impacting residents of Queensland (48%), Western Australia (47%) and Tasmania (46%).
Meeting repayments was of greatest concern in NSW (41%) and Western Australia (40%), while NSW (46%) and Victoria (44%) also highlighted foreign buyers as an impediment to housing affordability.
The impact of negative gearing as an impediment to home ownership was felt most strongly in New South Wales (33%), followed by Tasmania and the ACT (31%), and Victoria (30%).
Overall, respondents highlighted removal of stamp duty (73%) and government assistance (71%) as being the most helpful strategies to solving the problem while highlighting the need for job creation in areas with more affordable house prices (63%) and improving transport links (61%).
However, despite housing affordability concerns and perceived impediments to buying a property, respondents revealed a lack of knowledge pertaining to available options to help them enter the property market.
Just half (51%) of respondents were aware about stamp duty concessions in place, 42% knew there are ways to buy a property with less than 20% deposit, and 25% understood there are restrictions on foreigners buying property in Australia.
For prospective homebuyers, price (79%) is the most important factor in choosing where to live, followed by transport links (52%) and proximity to work (45%).
However, buyers are willing to compromise, with 33% stating they would make concessions regarding a more affordable property, and 27% saying they would be flexible with moving further away from work.
In contrast, location remains a sticking point, with only 14% willing to move interstate and 21% willing to move to a less desirable area to find affordable housing.